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Tuesday 18 February, 2014

Poundland Group

Intention to Float on London Stock Exchange

RNS Number : 2848A

Poundland Group

18 February 2014

﻿

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT

This announcement is an advertisement and not a prospectus and not an offer of securities for sale in any jurisdiction, including in or into the United States, Canada, Japan or Australia. Investors should not purchase or subscribe for any shares referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") expected to be published by Poundland Group plc (the "Company") in due course in connection with the proposed admission of its ordinary shares ("Shares") to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") (together, "Admission"). A copy of the Prospectus will, following publication, be available for inspection from the Company's website at www.poundlandcorporate.com. This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction. References in this announcement to "Poundland" or the "Group" mean the Company together with Poundland Group Holdings Limited and its consolidated subsidiaries and subsidiary undertakings following a pre-IPO reorganisation (as described below).

For immediate release

18 February 2014

Poundland Group plc

Announcement of intention to float on the London Stock Exchange and appointment of new directors

Poundland Group plc, the leading UK single price value retailer, today announces its intention to proceed with an initial public offering (the "Offer" or "IPO"). The Company intends to apply for admission of the Shares to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange (together "Admission"). The Offer will comprise an offer of Shares to institutional investors.

In connection with the IPO, Poundland also announces the appointment of Darren Shapland, Trevor Bond, Tea Colaianni and Grant Hearn as independent Non-Executive Directors. These individuals all bring significant experience to the Board.

Poundland is the largest single price value general merchandise retailer in Europe by both sales and number of stores. Poundland opened its first store in 1990 and has grown to operate a network of over 500 stores across the UK and Ireland. Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks. The Group offers a wide range of products across different categories with a mix of branded and own-label products.

The Group operates under the "Poundland" brand in the UK and its low cost, efficient business model is designed to offer customers amazing value every day at the single price point of £1. Poundland successfully entered Ireland in September 2011 under the "Dealz" brand, where it sells the vast majority of its products for €1.49.

Business highlights

Poundland is the UK market leader in an attractive and structurally growing sector

· More than twice as many stores as the nearest single price competitor in the UK and the largest single price value general merchandise retailer in Europe

· The most comprehensive geographical coverage of any value general merchandise retailer across the UK

· The value general merchandise market is one of the fastest growing segments of the UK retail market, benefitting from the structural shift in consumer behaviour towards value1

Poundland is a trusted retail brand with differentiated value proposition and broad appeal

· Focus on delivering amazing value to its customers every day by selling a wide range of great products and top brands

· Strong brand value, brand recognition and customer loyalty

· Customer proposition appeals to a broad range of shoppers, with approximately 22 per cent. of UK customers now coming from the AB socio-demographic group (based on a survey conducted by Poundland in 2013)

Poundland has built a high quality national store estate that delivers consistently strong returns across formats and regions

· A national retailer in the UK with nearly 500 stores and has established an international foothold, now operating 31 stores in Ireland (as at 29 December 2013)

· Poundland's stores mature rapidly and the average pay-back for a new Poundland store is only around 12 months

· The Directors believe that there are significant opportunities to continue to expand the existing store estate and that there is potential for more than 1,000 Poundland stores in the UK

Poundland's well-invested infrastructure underpins a strong and scalable business model

· Well-invested supply chain and distribution infrastructure to support the next phase of anticipated growth

· New, modern and well-equipped 350,000 square foot distribution centre is scheduled to open in Harlow in late 2014 to underpin store roll-out programme

Poundland has a track record of delivering strong, profitable growth in the UK and Ireland

· Revenue has grown from £641.5 million in the 52 weeks ended 27 March 2011 to £880.5 million in the 2013 financial year (CAGR of approximately 17 per cent.). For the 39 weeks ended 29 December 2013 revenue amounted to £758.3 million

· Underlying EBITDA has increased at a faster rate than revenue, growing from £31.1 million in the 52 weeks ended 27 March 2011 to £45.5 million in the 2013 financial year (CAGR of approximately 21 per cent.). For the 39 weeks ended 29 December 2013 Underlying EBITDA amounted to £45.2 million

· Successful entry into the Irish market with the launch of Dealz in September 2011, demonstrating the ability to expand into a new territory. Dealz in Ireland was profitable in its first year of operation

· Senior Management team headed by Jim McCarthy who joined Poundland as CEO in 2006 and Nick Hateley who joined as CFO also in 2006

· Board of Directors, chaired by Andrew Higginson, former Tesco plc Finance and Strategy Director, is further strengthened by the appointment of Richard Lancaster, Group Trading Director, as an Executive Director, and four Independent Non-Executive Directors: Darren Shapland, Trevor Bond, Tea Colaianni and Grant Hearn

Clear strategy for growth

· Continued focus on delivering amazing value to its customers every day

· Planned expansion into continental Europe with a trial of up to 10 Dealz stores targeted to open in Spain over a two year period

· Store format and multi-channel development potential

Jim McCarthy, CEO of Poundland, said of the IPO:

"The value retail sector has been through a period of profound change in scale, customer perception and financial performance. The sector is now a mainstream feature of the UK retail market and Poundland has been a central architect of that change. Our single price point and our amazing value are appealing to an increasingly broad section of shoppers with 22% of our UK customers now coming from the AB demographic.

We have built a track record of delivering strong, profitable growth and I believe we have many more opportunities ahead, underpinned by our trusted brand, strong supplier relationships, differentiated value proposition and our well-invested and scalable infrastructure. Our success in Ireland - where we trade under the Dealz fascia - demonstrates that we have the capability to generate positive financial returns in new geographies quickly and underlines the potential in the business for further international growth in addition to our plans for continued rapid growth in the UK."

"I am delighted to welcome Darren, Trevor, Tea and Grant to the Board. That Poundland has attracted Non-Executive Directors of their calibre is a testament to the strength of the business. Their combined experience and retail insight will be invaluable to the Board. I believe we now have an excellent Board to take the Company into its next phase as a public company."

Details of the Offer

The Offer will comprise an offer of Shares to certain institutional investors in the United Kingdom and elsewhere outside the United States, and in the United States only to Qualified Institutional Buyers.

The Offer will comprise a partial sale by funds advised by Warburg Pincus (the "Warburg Pincus Funds") of their existing holding of Shares. The Offer will also provide certain directors and members of the senior management of the Company and other individuals (together with the Warburg Pincus Funds, the "Selling Shareholders") with an opportunity for a partial realisation of their investment in the Company. The Company will not be issuing any new shares to investors in connection with the Offer.

Each of the Company, its directors and members of its senior management, the Warburg Pincus Funds, and certain other Selling Shareholders will agree to customary lock-up arrangements in respect of their holding of Shares for specified periods of time following Admission.

Immediately following completion of the Offer, it is expected that the Company will have a free float of at least 25% of the issued share capital of the Company.

It is expected that Admission will take place in March 2014 and that, following Admission, the Company will be eligible for inclusion in the FTSE UK indices.

Poundland is the UK market leader in an attractive and structurally growing sector

Poundland is the largest single price value general merchandise retailer in Europe, operating more than twice as many stores as its nearest single price competitor in the UK. Poundland also has the most comprehensive geographical coverage of any value general merchandise retailer across the UK, with a nationwide coverage of stores in the UK.

The value general merchandise retail sector in the UK has demonstrated strong growth with the total value of the UK market at approximately £5.2 billion2 in 2012, reflecting a CAGR of approximately 15 per cent. since 2007. The historical growth rates have been driven by the rapid roll-out of stores as well as increased acceptance by consumers of the value general merchandise retail market, as consumers recognise the value offered by the sector.

The Directors believe that Poundland is well placed to take advantage of the expected growth opportunities within the sector and the benefits from the continued structural shift in consumer behaviour towards value, aided by the continued improvement in store standards and merchandising.

Poundland has established its market leading position in the UK by continuously focusing on delivering amazing value to its customers every day. The Directors believe that this is achieved by selling a wide range of great products and top brands, offering many new exciting lines each week, at a price point intended to offer customers amazing value for money.

Poundland sells a wide range of products across 17 product categories including household goods, grocery, impulse and health and beauty, with all products in Poundland stores in the UK selling for £1. Some of the most recognised consumer brands in the world are sold in Poundland stores, including Cadbury, Mars, Heinz, Nestle and Colgate. This branded product offering drives footfall to stores, and of the approximately 3,000 core range Stock Keeping Units ("SKUs") in the average Poundland store, over 1,000 SKUs are third-party branded. Poundland also has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third party branded products. Poundland is consistently developing new products, introducing approximately 10,000 SKUs, including both own label and third party branded products, every year. Poundland's own label provides the customer with even greater choice and better value.

The Directors believe that in the UK Poundland has established strong brand value and recognition as well as customer loyalty. A recent survey undertaken by the Company indicated that Poundland has prompted brand awareness of 95 per cent., which is significantly higher than other value general merchandise retailers in the UK and in line with large UK grocery chains.

The Directors also believe that Poundland's customer proposition has broad appeal. Based on a survey conducted by Poundland in 2013, approximately 22 per cent. of Poundland's UK customers were from the affluent AB socio-demographic group. This is further evidenced by the performance of stores located in more affluent towns such as Cambridge, Stratford upon Avon, Guildford and Bath, which generated higher sales per store as well as greater sales densities than the average Poundland store in the 2013 financial year.

High quality, national store estate with consistently strong returns across formats and regions

Since opening its first store in 1990, Poundland has expanded to become a national retailer in the UK with nearly 500 stores as well as having expanded internationally, operating 31 stores in Ireland as at 29 December 2013. All Poundland stores are of a high standard, with clean and bright points-of-sales and with strong emphasis on value and brands.

Poundland has a strong track record of delivering a successful store opening programme, having almost doubled its store estate under Warburg Pincus ownership, from 289 stores at the end of June 2010 to over 500 stores in less than four years. Poundland increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and 2013 financial years, respectively. In the 39 weeks ended 29 December 2013, Poundland increased its store portfolio by a further 59 net new stores.

A new Poundland store typically has a rapid maturity profile and delivers strong performance from opening. The first full six weeks' sales are generally the strongest as customers purchase a larger amount of non-consumable items. Sales typically stabilise 15 weeks after opening. The average pay-back period for a new Poundland store, including all costs associated with the opening such as capital expenditure and pre-opening costs, is around 12 months.

Stores are located across high streets, shopping centres and retail parks throughout the UK and Ireland. Store economics per location indicate consistent profitability performance across formats demonstrating the quality of the portfolio and the strength of the customer proposition. Poundland's average store size was 5,143 square feet in the 2013 financial year, but stores trade profitably across the full range of store sizes, which are between 1,700 square feet and 12,000 square feet. Poundland has national coverage of the UK, and store economics indicate that the customer proposition resonates well with customers across all regions. The consistency of performance across regions and store formats is demonstrated by the fact that 98%3 of the store estate was profitable on a store contribution basis in the 2013 financial year.

The Directors believe, supported by external research conducted by Javelin Group commissioned by Poundland, that there are significant opportunities to continue to add to the existing store estate and that there is potential for more than 1,000 Poundland stores in the UK, making it possible to more than double its existing UK portfolio.

Well-invested infrastructure underpinning a scalable business model

Poundland has a well-invested infrastructure, and the Directors believe that this creates a significant competitive advantage over other single price value general merchandise retailers. As a result of strong operating cash flow, Poundland has been able to internally fund its growth and investment in headcount, systems and distribution and supply chain infrastructure. Poundland's business model is set up to be a value retailer, focusing on efficiency and operating at low cost. Significant investment has been made in people and in finance, IT and HR systems, with the current group structure being set up and built for scalability and to manage growth.

Significant investment has also been made in the supply chain and distribution infrastructure to support the next phase of anticipated growth. A new distribution centre is scheduled to open in Harlow in late 2014, replacing the nearby temporary facility at Hoddesdon, which will increase total distribution capacity to operate approximately 750 stores in the UK and Ireland.

Poundland has developed strong relationships with its major suppliers. Poundland has a professional buying team and significant experience in sourcing globally with strong and long-standing relationships with suppliers through its sourcing office in Hong Kong and exclusive sourcing arrangement in India. Although the majority of FMCG products are sourced directly through its relationships with major suppliers in the UK, Poundland maintains relationships with wholesalers and distributors for bulk buying to ensure that a broad selection of products can be offered. Poundland closely manages its day-to-day running costs, and head office overheads have consistently declined as a percentage of sales over the last three years. The strengths of its business model and the efficiencies created from its well-invested systems, supply chain and distribution infrastructure and its people have resulted in industry-leading sales densities, with Poundland generating sales of £374 per square foot in the 2013 financial year compared to the average for other value general merchandise retailers in the UK of £245 per square foot during the same period.

Track record of delivering strong, profitable growth in the UK and Ireland

Poundland has generated strong revenue and Underlying EBITDA growth over each of the last three financial years. Sales consistently increased year-on-year during that period, growing from £641.5 million in the 52 weeks ended 27 March 2011 to £880.5 million in the 2013 financial year (CAGR of approximately 17 per cent.). Underlying EBITDA has increased at a faster rate than revenue, reflecting the positive operational leverage in the business and the benefit of scale, growing from £31.1 million in the 52 weeks ended 27 March 2011 to £45.5 million in the 2013 financial year (CAGR of approximately 21 per cent.). In the 39 weeks ended 29 December 2013, sales and Underlying EBITDA were £758.3 million and £45.2 million, respectively, representing an increase of 13.0 per cent. and 16.6 per cent., respectively, over the 39 weeks ended 30 December 2012.

Poundland successfully entered the Irish market with the launch of Dealz in September 2011. Poundland's expansion into Ireland represented a relatively low cost, low risk expansion strategy, and the Company currently operates 31 stores in Ireland across high streets, shopping centres and retail parks. The price point in Ireland is set at €1.49 with some products at other price points, and Dealz has a higher gross margin than Poundland's gross margin in the UK. Dealz has been profitable since its first full year of operation.

Financial highlights

52 weeks ended 27 March 2011a

52 weeks ended 1 April 2012b

52 weeks ended 31 March 2013

39 weeks ended 30 December 2012

39 weeks ended 29 December 2013

Number of stores at end of period

327

389

458

456

517

Revenue (£ millions)

641.5

765.4

880.5

671.1

758.3

Gross margin (%)

36.7

36.9

36.7

36.7

36.8

Underlying EBITDA (£ millions)c

31.1

38.7

45.5

38.8

45.2

Underlying EBITDA margin (%)c

4.8

5.1

5.2

5.8

6.0

Underlying profit for the periodd (£ millions)

12.0

17.7

21.8

20.0

24.0

a. The unaudited adjusted financial information relating to revenue, gross margin, Underlying EBITDA, Underlying EBITDA margin and underlying profit for the 52 week period ended 27 March 2011 has been derived from the audited UK GAAP financial information for Poundland Limited, the principal trading company of the Group, for the 52 week period ended 27 March 2011, with UK GAAP-to-IFRS adjustments and adjustments for consolidation of the results of Poundland Group Holdings Limited and its non-trading subsidiaries and subsidiary undertakings. This unaudited 52-week adjusted financial information has been prepared for illustrative purposes only and has not been prepared in accordance with Regulation S-X of the Securities Act, the Prospectus Directive or generally accepted accounting standards.

b. Figures for the 52 week period ending 1 April 2012 have been calculated by dividing the 2012 financial year figures by 53 and multiplying by 52 to allow for comparability.

c. The Group defines Underlying EBITDA as profit for the period before finance costs, finance income, tax, non-underlying items and depreciation and amortisation, and Underlying EBITDA margin as Underlying EBITDA divided by revenue.

d. Underlying profit for the period is after tax.

_________________________

Poundland benefits from excellent cash generation given the low capital expenditure needed to maintain the existing store portfolio as well as negative working capital. Poundland's cash conversion4, excluding any capital expenditure on existing stores, was 82.7 per cent. for the 2013 financial year.

Dividend policy

The Directors intend to adopt a dividend policy which reflects the long-term earnings and cash flow potential of the Group targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings.

Poundland's strong growth has been delivered by its experienced Executive Directors and senior management team, supported by a large, well-resourced employee base with high quality buying, retail and operational teams. The performance of the wider team is demonstrated by the success of its strategy of organic growth through consistent store openings as well as leveraging its sourcing expertise and strong supplier relationships in seeking to deliver amazing value every day to its customers.

Jim McCarthy joined Poundland as its Chief Executive Officer in 2006. His experience extends to over 40 years in retail, including serving as Managing Director of Sainsbury's Convenience Stores and as a member of the operating, retail and investment boards, as well as Chief Executive of T&S stores plc where he was responsible for the operation of 1,200 stores.

Nick Hateley joined Poundland as its Chief Financial Officer in 2006 from J Sainsbury plc where he was the Finance Director of Sainsbury's Convenience Stores. Mr Hateley has more than 25 years of experience in finance and business improvement.

Richard Lancaster joined Poundland as Trading Director in July 2012 and is responsible for Trading & Marketing. He has held Trading and Marketing Director positions with convenience store chains including the convenience store division of J Sainsbury plc. A two year tenure as Managing Director of Netto FoodStores Limited preceded time at Wm Morrison Supermarkets Plc as Senior Trading Director - Ambient and more latterly Marketing Director.

Clear Growth Strategy

Continued focuson delivering amazing value to its customers every day

Poundland has, through its long track record of profitable growth, demonstrated its ability to maintain and strengthen its position as the market leading, single-price value general merchandise retailer in the UK. To continue to drive its business performance, Poundland will remain true to its goal of delivering amazing value to its customers every day.

The Directors believe that product innovation and exclusive product ranges are key competitive advantages for Poundland, and therefore remain committed to refreshing and developing its product range to meet consumer demands. Poundland will continue to work closely with suppliers, both building on exclusive offers of third party branded products and further developing its own label brand families, to introduce new products and ranges that appeal to a wider demographic of customers. Seasonal products are an important driver of sales, and this is expected to continue, with further range and product development being undertaken in this category.

Poundland will also focus on increasing store marketing with tailored offers and third party promotions, vouchers, and marketing activity, where appropriate.

Continued store roll-out

Poundland has a strong track record of rapid store roll out in the UK with a proven ability to identify strongly performing locations. The Directors believe, supported by external research conducted by Javelin Group, that there is potential for more than 1,000 Poundland stores in the UK, making it possible to more than double its existing UK portfolio. In addition, the Directors believe, supported by external research conducted by Javelin Group, that there is potential for more than 70 stores in Ireland. The Directors plan to continue opening stores at similar rates as the last three years, adding approximately 60 net new stores per year, of which approximately 10 per cent. are expected to be in Ireland.

Poundland is increasingly focused on retail park stores as part of the overall new store mix, as retail park stores tend to be more profitable and have a higher average transaction value than the average Poundland store.

Optimisation of existing store portfolio

The Directors believe that there is an opportunity to leverage the strength of the Poundland brand and the attractiveness of the customer proposition into new categories and products, utilising the strong innovation capability within the business to design and develop own label products as well as continue to work with suppliers to develop exclusive new products.

In order to enhance the customer experience through increased aisle widths and presentation of a wider range of products, the optimal store size of a Poundland store has increased. There is therefore an opportunity to upsize or relocate some of its older stores with approximately 111 stores that are 4,000 square feet or less. The Directors believe that approximately half of these stores are undersized for their local catchment area market and have the potential to be either re-sited or extended to reach optimum space.

Planned expansion into continental Europe

The Directors believe that continental Europe could be an attractive opportunity providing a platform for longer term growth, in addition to the substantial opportunity presented by the UK and Ireland store roll out. Building on the success of the Dealz format, Poundland is preparing for a pilot launch in Spain under the Dealz brand in the 2015 financial year.

The Directors expect to open up to ten stores over a two-year period, which will initially be supplied from Poundland's UK distribution centres. The Directors expect that there will be significant brand and supplier overlap with the Dealz product base in Ireland. The pilot stores' performance will be assessed carefully ahead of any further roll out in Spain or elsewhere in continental Europe. The cost of this trial will be modest and the Directors believe it represents a low cost and low risk strategy to test market opportunity.

Format and channel development

Poundland will continue to explore new growth opportunities, such as the potential development of a transactional website to access new customers and fulfil different shopping missions, as well as developing new store formats such as a city centre format, which is a smaller store designed to operate in high footfall city centre locations with a focus on impulse purchases. In addition, there may be opportunities within the value general merchandise retail market for further consolidation.

Board of Directors

Chaired by Andrew Higginson, former Tesco plc Finance and Strategy Director, the Board of Directors has been further strengthened ahead of the proposed IPO by the appointment of Richard Lancaster, Group Trading Director, as an Executive Director, and four Independent Non-Executive Directors: Darren Shapland, Trevor Bond, Tea Colaianni and Grant Hearn

Independent Non-Executive Chairman

Andrew Higginson

Chief Executive Officer

Jim McCarthy

Chief Financial Officer

Nick Hateley

Executive Director

Richard Lancaster

Non-Executive Director

Paul Best

Non-Executive Director

Stephen Coates

Independent Non-Executive Director

Darren Shapland

Independent Non-Executive Director

Trevor Bond

Independent Non-Executive Director

Tea Colaianni

Independent Non-Executive Director

Grant Hearn

Executive Director biographies

Jim McCarthy (Chief Executive Officer)

Mr McCarthy joined Poundland as Chief Executive Officer in August 2006. Prior to joining Poundland, Mr McCarthy was Managing Director of J Sainsbury plc convenience stores and was a member of the operating, retail and investment boards.

His experience extends to over 40 years in retail including eight years as Chief Executive of T&S Stores plc (operated over 1200 stores and sold to Tesco plc), Managing Director of Neighbourhood Retailing (part of Next plc) and Managing Director of Birmingham Post & Mail Limited's retail estate. Mr McCarthy is also a non-executive chairman at Wynnstay Group plc.

Nick Hateley (Chief Financial Officer)

Mr Hateley joined Poundland as Chief Financial Officer in October 2006. He joined from J Sainsbury plc where he was the Finance Director of Sainsbury's Convenience Stores. Mr Hateley has 25 years experience in finance and business improvement which he gained at PricewaterhouseCoopers, Accenture and Lucas Industries plc.

Richard Lancaster (Executive Director)

Mr Lancaster joined Poundland as Trading Director in July 2012 and is responsible for Trading & Marketing. Mr Lancaster became an Executive Director in 2014. He joined the industry from Cambridge University in 1986 initially building a successful chain of convenience stores. Trading and Marketing Director positions followed with two regional convenience store chains and within the convenience store division of J Sainsbury plc.

A two year tenure as Managing Director of Netto FoodStores Limited preceded time at Wm Morrison Supermarkets Plc as Senior Trading Director - Ambient and more latterly Marketing Director.

Non-executive Director biographies

Andrew Higginson (Independent Non-Executive Chairman)

Mr Higginson joined Poundland as Independent Non-Executive Chairman in July 2012. After starting his career in FMCG with Unilever and Guinness, Mr Higginson has spent the last 22 years in retail. His roles have included Group Financial Director of Laura Ashley Holdings, The Burton Group, and 15 years as an Executive Director of Tesco plc including 11 years as Finance and Strategy Director, and four years running their Retail Services Division (Tesco.com, Tesco Bank, Tesco Telecoms and DunnHumby).

He retired from Tesco plc and is now Chairman of both N Brown Group plc and Poundland. He is also a non-executive director of BSkyB, Woolworths (South Africa), McCurrach UK and the Rugby Football Union.

Paul Best (Non-Executive Director)

Mr Best joined Poundland as a Non-Executive Director in April 2010. He joined Warburg Pincus in 2002 and is responsible for investments in the European consumer and healthcare sectors. Prior to joining Warburg Pincus, Mr Best worked at Morgan Stanley in the investment banking and fixed income divisions. He has also been involved in cable investing activities in Europe, served as a director of Ziggo N.V. and is currently a director of INEA S.A. He received an M.A. (first class) in mathematics from Cambridge University.

Stephen Coates (Non-Executive Director)

Mr Coates joined Poundland as a Non-Executive Director in April 2010. He joined Warburg Pincus in 2003 and focuses on the firm's European consumer, industrial and services activities with an emphasis on consumer and industrial markets. Previously, Mr Coates worked at Permira. He is also a director of Survitec Group (Finance 1) Limited and Clondalkin Group (Holdings) B.V.. Mr Coates received an M.A. in politics, philosophy and economics from Oxford University, is a chartered accountant and completed the Advanced Management Program at Harvard Business School.

Darren Shapland (Independent Non-Executive Director)

Mr Shapland joins the Board as Senior Independent Director. He brings extensive retail knowledge and broad public company experience gained throughout his career, most recently as Chief Executive Officer of Carpetright plc. Prior to this, Mr Shapland spent six years at J Sainsbury plc, initially as Chief Financial Officer and subsequently as the Group Development Director.

Trevor Bond (Independent Non-Executive Director)

Mr Bond is President and Chief Customer Officer at Mondelēz International (formerly Kraft Foods, Inc.) and will chair the Audit Committee. From 2010 to 2012, Mr Bond was President, Markets and Sales for Kraft Foods Europe, with responsibility for the country commercial units. He has spent most of his career with Cadbury (acquired by Mondelēz International in 2010), joining the company in 1986. He built a strong track record as he assumed increasingly senior general management and finance roles across Europe, the Americas and Asia. Prior to his role at Kraft Foods Europe, Mr Bond led the Cadbury business in Britain and Ireland, delivering impressive growth in these mature markets. Mr Bond brings broad international experience and FMCG-supplier insight to the board.

Tea Colaianni (Independent Non-Executive Director)

Ms Colaianni is Group HR Director for Merlin Entertainments plc, which floated on the London Stock Exchange in November 2013. She will Chair the Remuneration Committee. Ms Colaianni is Italian, and a European Employment lawyer by background. Having begun her legal career in Brussels, advising multinational companies on EU related affairs, she moved into Human Resources and subsequently re-located to London. She has worked across a number of industries, recently heading up the Human Resources function in Europe for Hilton Hotels Corporation. The Board will benefit from Ms Colaianni's insight into consumer facing businesses and her international experience.

Grant Hearn (Independent Non-Executive Director)

Mr Hearn is the former Chief Executive Officer of Travelodge. During his 10 year career with the hotel business Mr Hearn also served as Executive Chairman. He has a wealth of experience in the hotel and travel industry having previously held senior positions at Hilton Group and Whitbread. He brings significant experience in customer-facing businesses, specifically in the value sector. Grant will Chair our Governance and Nominations Committee.

Pre-IPO reorganisation

Poundland Group Holdings Limited was acquired by the Warburg Pincus Funds in June 2010. Immediately prior to Admission, and as part of a pre-IPO reorganisation, Poundland Group Holdings Limited will become a wholly owned subsidiary of the Company and the Company will then be the holding company of the Group.

DISCLAIMERS

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Credit Suisse and J.P. Morgan Cazenove solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000,as amended.

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement is an advertisement and not a prospectus and investors should not purchase or subscribe for any securities referred to in this announcement except on the basis of information in the Prospectus to be published by the Company in due course in connection with the proposed admission of the Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities.

This announcement is not for publication or distribution, in whole or in part, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, the securities referred to herein to any person in any jurisdiction, including the United States, Australia, Canada or Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful.

The securities referred to herein may not be offered or sold, directly or indirectly, in the United States unless registered under the US Securities Act of 1933, as amended (the "US Securities Act") or offered in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. The offer and sale of securities referred to herein has not been and will not be registered under the US Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the Shares in the United States, Australia, Canada or Japan. Subject to certain exceptions, the Shares referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan.

This announcement is only addressed to and directed at persons in member states of the European Economic Area ("EEA") who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC), as amended ("Qualified Investors"). In addition, in the United Kingdom, this announcement is addressed and directed only at Qualified Investors who (i) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) are persons who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, and (iii) to persons to whom it may otherwise be lawful to communicate it to (all such persons being referred to as "relevant persons"). Any investment or investment activity to which this announcement relates is available only to relevant persons in the United Kingdom and Qualified Investors in any member state of the EEA other than the United Kingdom, and will be engaged in only with such persons. Other persons should not rely or act upon this announcement or any of its contents.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Group's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, the Company does not undertake to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

Each of the Company, Credit, J.P. Morgan Cazenove, Canaccord Genuity, Shore Capital and Rothschild (together, the "Banks") and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Any purchase of Shares in the proposed IPO should be made solely on the basis of the information contained in the final Prospectus. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change.

The IPO timetable, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that Admission will occur and you should not base your financial decisions on the Company's intentions in relation to Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all or part of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the IPO. The value of Shares can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of the IPO for the person concerned. Past performance cannot be relied upon as a guide to future performance.

Credit Suisse, J.P. Morgan and Rothschild, each of which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, and Canaccord Genuity and Shore, each of which is authorised and regulated by the Financial Conduct Authority, are acting exclusively for the Company and no-one else in connection with the IPO. They will not regard any other person as their respective clients in relation to the IPO and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the IPO, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the IPO, each of the Banks and any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of the Company or related investments in connection with the IPO or otherwise. Accordingly, references in the Prospectus, once published, to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by any of the Banks and any of their affiliates acting as investors for their own accounts. In addition, certain of the Banks or their affiliates may enter into financing arrangements and swaps in connection with which they or their affiliates may from time to time acquire, hold or dispose of Shares. None of the Banks intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of Banks or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

In connection with the IPO, J.P. Morgan Cazenove, as stabilisation manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Shares or effect other transactions with a view to supporting the market price of the Shares at a higher level than that which might otherwise prevail in the open market. J.P. Morgan Cazenove is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of the Shares on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on J.P. Morgan Cazenove or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the Shares above the offer price. Save as required by law or regulation, neither J.P. Morgan Cazenove nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the IPO.

In connection with the IPO, J.P. Morgan Cazenove, as stabilisation manager, may, for stabilisation purposes, over-allot Shares up to a maximum of 15 per cent. of the total number of Shares comprised in the IPO. For the purposes of allowing it to cover short positions resulting from any over-allotments and/or from sales of Shares effected by it during the stabilisation period, certain existing shareholders will grant to J.P. Morgan Cazenove an option (the "Over-allotment Option") pursuant to which J.P. Morgan Cazenove may require such existing shareholders to sell additional Shares (the "Over-allotment Shares") at the offer price. The Over-allotment Option will be exercisable in whole or in part, upon notice by J.P. Morgan Cazenove, for 30 calendar days after the commencement of conditional trading of the Shares on the London Stock Exchange. Any Over-allotment Shares sold by J.P. Morgan Cazenove will be sold on the same terms and conditions as the Shares being sold or issued in the IPO and will form a single class for all purposes with the other Shares. Save as required by law or regulation, neither J.P. Morgan Cazenove nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the IPO.

Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this document may not conform exactly with the total figure given.

1 PwC, "The UK value General Merchandising Market", November 2013

2 PwC, "The UK value General Merchandising Market", November 2013
3 Based on stores open for complete 52 week trading period (382 stores at end of 2013 financial year); UK GAAP

in working capital and minus changes in capital expenditure on existing stores) divided by Underlying EBITDA

This information is provided by RNS

The company news service from the London Stock Exchange

END

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